WILL IT BE LOISAIDA OR ALPHABET CITY?

WILL IT BE LOISAIDA OR ALPHABET CITY?; Two Visions Vie In the East Village

By LISA W. FODERARO

Published: May 17, 1987

AS the spirit of the East Village creeps eastward into the region that runs from Avenues A to D, between Houston and 14th Streets, two distinct yet overlapping identities are emerging. One is Loisaida, indigenous and struggling; the other is Alphabet City, arty and affluent.

For all their differences, the two Manhattan communities have a common fixation: the area's vast stock of city-owned properties. After years of disputes and breakdowns in negotiations, housing activists, developers and city officials appear ready to overcome the problems that have blocked development efforts in the past.

Both sides are keenly interested in just how and when development will proceed on the scores of rubble-strewn lots and burned-out buildings that have been owned by New York City since the widespread disinvestment of the mid-1970's, when landlords literally walked away from their buildings. The abandoned properties blight an otherwise vibrant area and provide a haven for drug dealers.

Loisaida (pronounced low-ee-SIDE-uh) - Spanglish for Lower East Side -has for years been home to many Hispanic New Yorkers, as well as to blacks, Polish-Americans, Jews and Italian-Americans, generally with low to moderate incomes. Since 1982, when the first signs of gentrification appeared, the old-timers have watched art galleries replace shooting galleries, and gourmet delis take over bodegas, the neighborhood groceries.

As expensive housing is fashioned out of privately owned tenements and moribund commercial buildings, the longtime residents of Loisaida have organized to fight displacement, landlord harassment, illusory buyout offers and illegal rent increases. Some 30 housing groups, which make up the Lower East Side Joint Planning Council, would like to see as many low-income housing units as possible emerge from the land and structures now under the city's control.

Alphabet City - a name that refers to the lettered avenues - is a continuation of the East Village - a playful, anarchic place filled with artists' studios, eccentric cafes and experimental theaters.

It is also a scene of intense real-estate activity, from speculative flipping to a flurry of recent rehabilitations. Hundreds of elegant, loft-style co-ops and condominiums have come on the market selling for $200 to $300 a square foot.

For the designers, models, photographers, advertisers and bankers attracted to the area, housing in Alphabet City is a good buy compared to new units on the Upper East Side, which average $350 a square foot. To developers, the city-owned property is a vast, untapped resource for future construction.

Now, after several years of fruitless discussions between the city and the community's residents, and the failure of previous plans for the development of the city's 100 lots and 150 vacant buildings, a settlement may be near.

Paul A. Crotty, the Commissioner of the city's Department of Housing Preservation and Development, which has been in intense negotiations since January with Community Board 3, has set the end of next month as the deadline for an agreement, at least in principle, on the disposition of the city property and the ratio of low-income to market-rate units.

IN July 1984 Mayor Koch made public a plan to create one low-income unit for every four market-rate apartments created in a cross-subsidy arrangement involving the city-owned property in the area. In addition, proceeds from property sales were to be used to restore already occupied city-owned housing there. But the proposal was attacked, and effectively halted, by community groups, which considered it too vague and lukewarm in its commitment to low-income housing.

The current negotiations have given new life to the project.

'We're making progress,'' Mr. Crotty said in an interview. ''When I came in, I found there was a great deal of misunderstanding between this agency and the community. We're now proceeding on the basis that we understand each other.''

''We are closer to an agreement than ever before,'' said Luis Nieves, the chairman of Community Board 3 and the executive director of the Lower East Side Coalition Housing Development, a nonprofit organization. ''We've been pleasantly surprised by the whole tone of the meetings; there has been a general sense of cooperation on both sides.''

According to Mr. Crotty, under current zoning regulations, there is the potential for the development of about 3,000 units from the land the city owns on the entire Lower East Side, about 80 percent of which falls between Houston and 14th Streets. The market value of that property, most of it east of Avenue B, is estimated to average $27,000 per potential unit, or a total of $81 million.

The community board has called for a one-for-one cross subsidy in which one low-income unit would be created for every market-rate apartment produced. Mr. Nieves said the community also sought to prevent the ''ghettoization'' of Loisaida, with all the market-rate units on Avenues A and B, and all of the low- and moderate-income housing on Avenues C and D, where transportation, sanitation and educational services would likely be inferior. Another demand of the board is that the subsidized housing be ready for occupancy at the same time as the more expensive apartments.